The issuer of the world's second-largest stablecoin USDC, Circle, has officially initiated its listing plan and is preparing to debut on the New York Stock Exchange. On April 2, the company filed its prospectus with the SEC, taking the long-awaited first step towards an IPO. The S-1 filing did not specify an IPO timeline, but typically, trading can begin within weeks of a company submitting an S-1. According to the S-1 Prospectus, JPMorgan Chase and Citigroup will serve as lead underwriters, with the market estimating Circle's valuation could reach $5 billion, under the ticker symbol "CRCL." The prospectus indicates that Circle will issue an unspecified number of Class A common shares, with existing shareholders also registering to sell a portion of their holdings. The pricing per share range has not yet been determined. Proceeds from the sale of shares will go to Circle, while proceeds from the sale by existing shareholders will not accrue to the company.

This marks Circle's second attempt at going public. At the end of 2022, it had tried to enter the capital markets through a merger with a Special Purpose Acquisition Company (SPAC) but ultimately fell through due to regulatory issues, resulting in a loss of over $44 million. Since then, Circle has adjusted its strategy, gradually moving closer to financial centers. Last year, it relocated its headquarters from Boston to One World Trade Center in New York, further integrating into the global financial hub.

This time, Circle has chosen a delicate timing—the tech stocks have recently experienced significant volatility, and the Nasdaq index just went through its worst quarter since 2022. If successful in listing, Circle will become another heavyweight cryptocurrency company to land on a major U.S. exchange following Coinbase, as well as the first stablecoin-listed company.

The Continuous Pressure on Profitability in the Ecosystem

Circle's story began in 2013 when its focus was a company dedicated to Bitcoin-related businesses, aiming to make digital currency use more convenient through technology. As the cryptocurrency market evolved, Circle seized a new opportunity in 2018—partnering with Coinbase to launch the U.S. dollar stablecoin USDC through the Centre consortium. USDC is a digital asset pegged 1:1 to the U.S. dollar, designed to provide stability and credibility for crypto transactions.

In 2023, the Centre consortium disbanded, and Circle gained full control of USDC. Since then, USDC has evolved from being a collaborative project to Circle's core asset. By 2025, USDC's market capitalization had reached $60.1 billion, although still behind Tether's USDT (market cap of $144.4 billion), its growth momentum and transparency have secured its position in the market.

USDC is Circle's most well-known product, and it is the world's second-largest stablecoin. During the last crypto bull run, USDC quickly rose to prominence, with its market capitalization soaring from less than $1 billion in 2020 to over $500 billion in 2022, further growing to $601 billion in 2024, accounting for 26% of the entire stablecoin market. While the leader Tether (USDT) still holds a dominant 67% market share, USDC has seen rapid growth this year—its market cap has increased by 36%, while Tether has only grown by 5%.

Data Source: CryptoQuant

Related Reading: "Circle IPO Aims for $50 Billion Valuation, Is There a Concept Stock for Stablecoins?"

High Channel Distribution Costs Leading to Continuous Decline in Gross Margin

Circle understands that the success of USDC is inseparable from ecosystem support. Initially, it collaborated with Coinbase to issue USDC through the Centre consortium. Still, in 2023, the consortium dissolved, and Circle took full control. As per the S-1 filing, Coinbase now holds a minority stake in Circle, and both parties evenly share profits based on the total reserve revenue (still divided according to the amount of USDC in their respective wallets and custody products). In 2024, Circle earned approximately $17 billion in revenue and paid over $9 billion to Coinbase as a distribution partner.

In December 2023, Circle further partnered with the world's largest crypto exchange Binance, paying a one-time fee of $60.25 million and monthly proportional fees to enable USDC participation in the Binance Launchpool, causing the USDC supply on the Binance platform to increase from less than $1 billion to $4 billion.

This "spend to grow" strategy significantly boosted USDC's circulation and market acceptance but also increased operational costs. Through partnerships with giants like Coinbase, Binance, and BlackRock, Circle has built a robust distribution network to ensure USDC's penetration in the global crypto ecosystem.

Institutional Web of Trust as a Key Moat

Circle's business model can be described as "Stablecoin + Ecosystem Expansion." It is not only a stablecoin issuer but also aims to build an ecosystem covering crypto payments, cross-chain technology, and even enterprise solutions through a series of products and services.

The issuance and circulation of USDC are at the core of Circle's business and its most important source of revenue. For every USDC issued, Circle deposits an equivalent amount of U.S. dollars or highly liquid assets in a bank as reserves to ensure its stability. Users can use USDC for trading, payments, or storing value, while Circle earns income by managing these reserve assets. To expand the circulation of USDC, Circle has established deep partnerships with financial and crypto giants such as Coinbase, Binance, and BlackRock. For example, in the agreement with Coinbase, Circle sets a payment base according to the daily net income of the USDC reserves, and after deducting a management fee, the two parties split the earnings proportionally. By 2024, the circulation of USDC continues to grow, especially gaining prominence in the DeFi and cross-border payment sectors.

In terms of payments and enterprise services, Circle plays a bridging role between the crypto world and traditional business. It provides a full set of payment APIs and enterprise tools, allowing merchants to easily accept USDC payments and automatically convert them to fiat currency. This service model is similar to PayPal in traditional finance but optimized for the crypto economy. For example, an e-commerce platform can integrate Circle's Checkout service, and after consumers make payments with USDC, Circle will instantly convert the cryptocurrency into dollars and settle with the merchant, significantly lowering the barrier for businesses to enter crypto payments.

Cross-chain technology and blockchain infrastructure are another key barrier that Circle has built. The cross-chain bridge developed by the company enables USDC to freely move across different blockchains such as Ethereum, Solana, greatly enhancing the stablecoin's usability. In addition, the IPO prospectus reveals that Circle is developing a Layer 2 solution aimed at reducing transaction costs and increasing efficiency, laying out its crypto infrastructure.

To directly reach end users, Circle has also launched digital wallet services. Although currently limited in scale, it is evident that the business is extending from B2B to B2C.

In summary, Circle's business model is like a "Stablecoin-Driven Ecosystem Loop": centered around USDC, extending the potential of cryptocurrency to the real world through payments, technology, and user services. Its ambition is significant, covering almost all crypto areas beyond CEX.

Where Did Last Year's $16.8 Billion Revenue Come From?

According to the prospectus, the financial data disclosed this time fully presents Circle's recent performance.

For the 2023 fiscal year (ending December 31), total revenue and reserve income reached $16.8 billion, a 16% year-over-year increase, continuing the growth from $14.5 billion in 2022 and $7.72 billion in 2021. Revenue in 2024 mainly comes from interest income on reserve assets supporting USDC.

Operating expenses in 2024 were $4.917 billion, with compensation expenses ($2.634 billion), administrative expenses ($1.373 billion), and IT infrastructure investment ($27.1 million) accounting for the majority. The net profit from continuing operations was $1.569 billion, lower than the $2.715 billion in 2023 but a significant improvement from the $761.8 million loss in 2022. The 2024 adjusted EBITDA is $2.849 billion.

The company also recorded a $4.3 million impairment loss on digital assets during the year, and received $54.4 million in other income from non-core business revenue. The prospectus has not yet finalized the weighted average number of shares outstanding or earnings per share data.

As per the plan, Circle intends to use the IPO proceeds for product development, working capital, scaling operations, and potential acquisitions, among other general corporate purposes. Specific pricing timelines and share allocation schemes have not been announced yet.

Operational and Financial Metrics

Circle earns money by managing the reserve assets of USDC. These reserves include cash and short-term U.S. Treasuries, generating significant interest income in a high-rate environment. The S-1 shows that Circle's total revenue in 2024 was $16.8 billion, with 99% (approximately $16.65 billion) coming from reserve income, while other sources (such as payment services and cross-chain technology) only contributed $15 million. This means that Circle relies almost entirely on a single source of revenue, which is influenced by government interest rate policies. The filing estimates that a 1% decrease in interest rates would result in a $441 million reduction in reserve income. However, Circle believes that low rates might stimulate USDC circulation growth, but this relationship is described as "complex, uncertain, and unproven."

As of December 31, 2024, USDC has been used for approximately $20 trillion in on-chain transactions. The table below shows key operational and financial metrics for the period mentioned, along with relevant GAAP (Generally Accepted Accounting Principles) metrics:

The USDC circulation and average USDC circulation are the primary contributors to Circle's reserve revenue and serve as metrics to gauge the breadth of the Circle stablecoin ecosystem. As of December 31, 2024, December 31, 2023, and December 31, 2022, the company held USDC reserves of $294.5 million, $275.8 million, and $5.3 million, respectively.

The Reserve Return Rate refers to the rate of return generated by the reserve assets, which is a key determinant of reserve revenue. It is calculated as the reserve revenue divided by the average period-end balance of Circle stablecoin holders' dedicated reserves. As of December 31, 2024, December 31, 2023, and December 31, 2022, the company's Reserve Return Rate was 5.0%, 4.7%, and 1.5%, respectively.

The Stablecoin Market Share refers to the circulating Circle stablecoin as a percentage of the total circulation of all fiat-backed stablecoins (digital assets pegged to the value of a fiat currency). This metric reflects the share of Circle stablecoin in the overall stablecoin market and its position in the competitive landscape. Since 2021, based on circulation, Circle has consistently been the world's second-largest stablecoin issuer. According to CoinMarketCap data, as of December 31, 2024, Circle's stablecoin market share was 24%.

Meaningful Wallets refer to the number of digital asset wallets with an on-chain USDC balance exceeding $10, serving as a key metric to measure the adoption breadth of USDC. The number of Meaningful Wallets in 2024 was 4.26 million, representing a 53.24% growth from the end of 2023.

Profit Breakdown

The table below shows Cirlce's company's 2024 Income Statement, detailing the company's 2024 revenue, expenses, and net profit indicators:

As of December 31, 2024, the reserve revenue was $1.676 billion, an increase of $230.5 million (16.1%) compared to the prior year. Approximately $139.9 million of the growth came from the increase in average daily USDC balance in circulation, reflecting the increased USDC demand associated with digital asset trading activity and Circle's market share gains in key markets; $89.9 million of the growth came from the yield rate improvement, primarily driven by the impact of the Fed rate hikes. Other income for 2024 decreased by $4.7 million (23.6%) year-over-year, with the main reason being a $3.9 million decline in transactional services revenue due to the gradual discontinuation of certain services in 2024.

In the 2024 fiscal year, the distribution and transaction costs increased by $291 million (40.4%) compared to the end of 2023. This increase was mainly due to a $216.6 million rise in distribution costs paid to Coinbase and an additional $74.1 million in other distribution incentive costs related to new strategic distribution partnerships, such as a one-time prepayment fee to Binance. Other expenses in the 2024 fiscal year decreased by $1.4 million (17.2%) compared to 2023, primarily because the company discontinued traditional transaction service products, resulting in a $0.9 million reduction in related expenses.

In the 2024 fiscal year, the profit was $156 million, representing a $112 million decrease from the net income in 2023. Despite a $230.5 million year-over-year growth in reserve income in 2024 compared to 2023, the distribution and transaction costs saw a significant increase of $291 million from the end of 2023. Total operating expenses increased by $39 million, leading to a downward trend in profits.

In terms of cash flow, for the three consecutive years from 2022 to 2024, the USDC reserve cash balance held in bank accounts far exceeded the FDIC insurance limit of $250,000 per financial institution. As of December 31, 2024, approximately 85% of the USDC reserve was held in the Circle Reserve Fund, with the remaining portion held in cash in several bank accounts. The Circle Reserve Fund is managed by BlackRock. The fund is only available to Circle, with Circle being the sole shareholder of the Circle Reserve Fund.

Regarding financing, in the 2024 fiscal year, the funds raised from financing amounted to $19.449 billion, while the funds raised in 2023 were -$20.322 billion, primarily due to the increase in circulating USDC in 2024, resulting in a net increase of $194.521 billion in stablecoin holder deposits. In contrast, the circulating USDC decreased in 2023, leading to a net decrease of $203.222 billion in stablecoin holder deposits.

Excessive Compensation Costs Questioned, Are Executives the True Winners of the IPO?

Circle's IPO is not only about the company's future but also a capital feast. After going public, Circle will implement a three-tier equity structure: Class A shares issued in the IPO carry one vote per share; Class B shares held by co-founders Jeremy Allaire and Patrick Sean Neville have five votes per share but do not exceed 30% of the total voting rights; Class C shares have no voting rights and can convert under specific conditions. B shares automatically convert to A shares when transferred outside approved channels.

In addition, according to the IPO prospectus, CEO Jeremy Allaire's compensation includes an annual salary of $900,000, a stock award of $9 million, and an additional $2 million in benefits, totaling over $12 million. CFO Jeremy Fox-Geen's total compensation is $5.2 million ($500,000 annual salary + $4 million stock + $700,000 benefits). Other executives such as Chief Strategy Officer Elisabeth Carpenter, President and Chief Legal Officer Heath Tarbert, and Chief Product and Technology Officer Nikhil Chandhok have annual compensations ranging from $4 million to $5 million. Working at Circle evidently comes with substantial rewards.

For venture capital giants, investors holding over 5% of the shares will make a significant profit, including General Catalyst (the largest corporate shareholder), Beijing IDG Capital, Breyer Capital, Accel, Oak Investment Partners, and Fidelity. These institutions collectively hold over 130 million shares, and the IPO, valued at $4 billion to $5 billion, will bring them substantial returns.

USDC's market capitalization has doubled in the past year, increasing from around $30 billion to $60 billion, but the market competition is intensifying. The main competitor, Tether (USDT), leads by a market capitalization of over $140 billion. Additionally, PayPal plans to launch its own stablecoin in 2023, and banking giants like JPMorgan Chase are also exploring the blockchain space. In the S-1 filing, Circle acknowledges these competitors and admits to the complex market environment.

Nevertheless, Circle remains optimistic about the future. The U.S. legislative process regarding stablecoins is accelerating, with the "GENIUS Act" and "STABLE Act" gaining attention. Following the deliberation on April 2nd, Chairman Bryan Steil of the House Digital Asset Task Force stated that the two bills are expected to achieve consensus after revisions and are planned to be sent to the President for signing into law within the first 100 days of the Trump administration. This development provides a policy favorable environment for compliant stablecoin companies like Circle and signifies an increasingly clear regulatory framework for the digital dollar space in the U.S.

This IPO still needs to pass regulatory review and progress based on market conditions. Specific details such as the issuance size and per-share valuation will be disclosed through supplementary filings before listing. Although uncertainties remain, Circle's IPO is likely to be a key signal for the future direction of the stablecoin industry. As global regulatory policies become clearer, stablecoins are moving towards compliance and deep institutional participation. Can Circle seize this opportunity, leverage the ample capital flow from Wall Street to the crypto market, and challenge Tether's long-standing dominance? Facing multiple challenges in regulation, competition, and market fluctuations, can Circle meet market expectations? All of this will require time to prove.

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